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Nokia Cuts 3,500 Job, Said To Focus On Low-End Software

Nokia is focusing on what it does best - feature phones; Image via Wikipedia

In its bid to fight Apple‘s iPhone and Google‘s Android devices, Nokia is cutting 3,500 jobs to save costs, and reinvigorating its historic success in feature phones, by reportedly developing new software for low-end devices.

Nokia said in a press release this morning that it was laying off as many as 3,500 people to “align its workforce and operations.” Most of the job cuts will be in manufacturing, as well as its Location & Commerce division, created earlier this year by integrating its Navteq business and social and location services business. It’ll close a factory in Romania by the end of this year, and move manufacturing to suppliers in Asia.

The company is also reviewing the role of its manufacturing operations in Finland, Hungary and Mexico, and plans to shift their focus to software and sales. It will close its Location & Commerce operations in Bonn, Germany and Malvern, U.S., too.

“We must take painful, yet necessary, steps to align our workforce and operations with our path forward,” Nokia’s CEO Stephen Elop said in an official statement.

Meanwhile, Nokia is reportedly working on new software that’s aimed at low-end feature phones — and no, it’s not a revival of Symbian. According to the Wall Street Journal, Nokia is working on a Linux-based operating system code-named Meltemi, and the project is being led by Nokia’s executive vice president for mobile phones, Mary McDowell.

It’s a sign that Nokia still wants to differentiate itself from other handset makers by providing its own mobile software, although it will no longer attempt to do this for high-end smartphones. For that it has its partnership with Microsoft, in which all future smartphone offerings will run on Windows Phone. It’s not clear exactly when the first Nokia-Windows Phones will be released, but Nokia recently said it would get them out by the end of this year.

Meltemi seems to represent another, newfangled strategy for helping Nokia maintain its marketshare and profits. According to the Journal, feature phones (the kinds that are not entirely touchscreen and include a tactile keypad), made up roughly 47% of Nokia’s device-and-services sales in the second quarter, with the strongest growth coming from emerging markets like India. Though it’s a relatively low-margin business, it isn’t as significantly under threat from the iPhone, considered a high-end phone, and Android phones made by the likes of HTC and Samsung, considered in the mid-range.

The trouble is that touch-screen Android phones are becoming cheaper, and the emerging markets which previously ate up Nokia’s feature phones are now looking for the next step up: touchscreen capability and better Internet browsing. According to the Journal, there are indications that the touch-screen interface used in Nokia’s N9 smartphone, launched in June, could eventually be found in its feature phones.

The N9 was the first and last Nokia phone that ran on the open-sourced Meego operating system, which the company was developing in partnership with Intel. When Nokia announced its partnership with Microsoft, it effectively sidelined Meego for research into future, disruptive technology. This irked Intel. But then yesterday, Intel announced it was working with Samsung on a new open-sourced operating system called Tizen that would be a successor to Meego, and focus on HTML5 Internet standards.

It thus seems a little ironic that news of Meltemi appears to have leaked today, some 24 hours after the Tizen announcement by Intel.

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